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Business Legal Issues - Riordan

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International Business Legal Issues

Riordan Manufacturing

University of Phoenix

BUS415 Business Law


Riordan Manufacturing is an industry leader in plastic injection molding with plants in Georgia, Michigan and now China. With the company’s expansion into a global market, the electronic commerce (e-business) will be a beneficial form of commerce that is currently flourishing in the modern world of global business. The Internet is used to buy and sell goods and services world wide. Cheeseman (2004) explains that the economic growth of computer technology and e-commerce has exceeded that of manufacturing in the United States economy. E-business is used to increase productivity and efficiency in sales and marketing, to strengthen customer relationships and to help in the export of its products globally. Riordan understands that legal and regulatory protection is required, the cultural differences of the customers must be understood, and they must find solutions for incorporating preferences and e-business restrictions and protection to support their stockholders.

Legal and Regulatory Issues

The Export Administration Regulations (EAR) regulates the exporting of items for national security foreign policy and nonproliferation (controlling an excessive spread). All exports from the U.S. must be documented as specified by the EAR and must be cleared through the U.S. Customs. Violation of federal customs laws would be tried in a Federal Court. Unnecessary obstacles relating to exporting have been removed to help global business. According to International Legal Considerations (2007), some export items may require a license depending on the technical characteristics, the destination, the end use and the user. Riordan has found that once the export items they manufacture have been classified, it can be determined if a license is required for exporting to the different countries they want to market. All countries are treated differently depending on the varying national security and foreign policy considerations. To ensure that exports go only to legally authorized destinations, the U.S. government requires a destination control statement on all shipping documents.

Each foreign country has its own antitrust laws that must be complied with when exporting. They reflect the nation’s commitment to an economy based on competition. This provides consumers with goods and services at the lowest price that an efficient business can profitably offer. The Antitrust Division of the U.S. Department of Justice enforces foreign antitrust issues in the Federal Court. Riordan has provided its employees with intensive training so they understand it is unlawful for a U.S. firm to pay or offer to pay money or give anything of value to any foreign official for the purpose of obtaining or retaining business. For example, a person charged with violation of the anitbribery provision of this Federal Corrupt Practices Act (FCPA) may try to use the defense that the payment was lawful under the written laws and regulations of the foreign country or that the payment was associated with demonstrating the product. Prosecution under federal criminal laws in the Federal Court can be subject to imprisonment and fines. Riordan personnel are aware that if a person or company is found in violation of the FCPA, they can be banned from doing business with the federal government and can be suspended the right to do business in the U.S.

International Business Differences and E-business Restrictions

Understanding the need and differences in doing e-business and exporting in a foreign market will be crucial to Riordan Manufacturing now that they have extended the business globally. According to Violino (2001), obstacles include cultural differences, legal and regulatory restrictions, language differences, tax code differences, and the handling of multiple currencies. Software tools that need to be incorporated into Riordan’s business software for example are currency conversion, increased language translations, online customs forms for processing, and calculations for global shipping. Translating the constantly changing multinational information on websites and transferring the information to supply distributors makes global commerce very complex. With a diverse international mix of Web users, the Riordan website must support not only the language of the customers but also cater to the cultures and their preferences. For example in Australia they use postal code instead of zip code. Prices must be listed in the required local currency. If Riordan expands their plastics exporting to Israel and Japan, the copy must read from right to left. Effective E-business transactions of online communication and effective strategies for



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